UPDATE 1-SMFG buying Perella Weinberg's U.S. railcar lease business

Thu Dec 12, 2013 2:56am EST

* SMFG paying $290-$490 million for company

* SMFG buying Chicago-based Flagship Rail Services

* Japanese banks remain active in overseas acquisitions

By Taiga Uranaka

TOKYO, Dec 12 (Reuters) - Sumitomo Mitsui Financial Group said it will acquire the U.S. railcar leasing business of Perella Weinberg Partners LP, illustrating the continued appetite of Japanese banks for overseas assets.

Japan's third-largest lender by assets did not disclose terms of the deal, but a source familiar with the matter said the bank is likely to pay 30-50 billion yen ($290-$490 million).

In a statement issued on Thursday, Sumitomo Mitsui Banking Corp, a core unit of SMFG, said an increase in shale oil and gas production is driving up demand for rail freight transportation in the United States.

"The U.S. railcar leasing business will continue to be positively impacted by robust overall demand from the U.S. rail freight transportation industry," it said.

The Japanese bank will buy Chicago-based Flagship Rail Services LLC from a fund managed by Perella Weinberg Partners LP. The leasing company owns about 15,000 railcars and its assets are valued at $1.1 billion, SMBC said in the statement.

The fund, Perella Weinberg Asset Based Value Strategy, had bought the railcar leasing business from American International Group in 2011. Reuters reported in September that Perella Weinberg was looking to sell Flagship Rail Services.

Relatively unscathed by global the financial crisis five years ago, Japanese banks have been aggressively snapping up assets overseas in their search for growth beyond a weak home market.

Earlier this year, SMFG agreed to buy 40 percent of Bank Tabungan Pensiunan Nasional Tbk PT in a deal valued at $1.5 billion.

Last year, the Japanese bank and its partners acquired Royal Bank of Scotland's aircraft leasing business for $7.3 billion. The deal for RBS Aviation Capital, the world's fourth-largest aircraft leasing company, instantly made SMFG a major player in the industry.

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